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Every morning, in front of the DDA park in Delhi’s Mayur Vihar, she loads her cart with fresh vegetables. Tomatoes and peas, cucumbers and radishes, and bunches of coriander leaves. Her regular customers trickle in, calling her Amma.

Her cart almost empties out by evening. The 50-year-old, feisty vegetable vendor can be temperamental with her haggling customers. Unlettered, she often fumbles with her calculations. Then the buyers help her out, adding this and multiplying that. What they don’t know is her name: Lalita Devi. And her story.

She grew up, poor and unschooled, in Azamgarh, Uttar Pradesh. She got married in her early teens and moved to Delhi, but life in the capital turned out to be hard. Her husband left her when she was in her 30s, leaving her to take care of her two daughters and a son.
Illiterate and unskilled, abandoned by her husband two decades ago, Lalita Devi, 50, turned into a vegetable vendor in Delhi to take care of her three children.“I started a tea stall,” she says. It didn’t bring her enough money and she began selling vegetables. “God is kind. I have a decent life. Who would have given a job to an unskilled, illiterate person like me? I can now manage my family,” she says. Her daughters, aged 20 and 25, are at home. Her son, 22, helps her out with the vegetable cart. How much does she earn? She doesn’t know but she says it is enough to feed her family and pay the rent of Rs 3,000. A long way away in Tripura, Abhishek Saha has another story to tell. The 33-year-old was a sales executive with the pharmaceutical company Cipla in Bengaluru. Two years ago, he returned to his hometown Agartala to set up Babuana Tea Stall. He sells sandwiches and three types of tea, charging `10-40 a cup, and tops it up with great service. “I have junked a regular job to be an entrepreneur. It gives me freedom to do things my way,” he says. Saha, who gets 400-plus customers daily, has big plans: “I want to expand first to Guwahati and then to Bengaluru.”

Self-employment is common in India. Sometimes, it is out of choice, like Saha’s. But more often, it is out of compulsion, like Devi’s. They represent two ends of the spectrum of India’s self-employed, which is 47% — almost half — of India’s 470 million workforce. Based on government data, about 215 million people are self-employed (See Who are India’s Self-Employed?). They include street vendors, rickshawpullers, carpenters, plumbers, chaiwallahs, grocers, taxi drivers, doctors, accountants and pakorawallahs.

Most of the self-employed are below the economic radar. They are homeless, office-less and unbanked. They are vulnerable and footloose and live on the fringes. They rarely figure in government policies or statistics, or even statements.

Economics Wrapped in Politics Now, change is afoot. Prime Minister Narendra Modi wants India’s self-employed to be visible, counted and strengthened. Last month, selfemployed pakoda sellers made headlines when Modi said, “Youth selling pakora outside… and earning Rs 200 a day also means creation of jobs.” Never mind the political storm it created. For millions of self-employed workingliving on the fringes, getting on the nation’s radar is a good start. If India has to progress, mainstreaming its self-employed will be an important stepping stone. In the second most populous country with 470 million workforce, employment today is a hot button issue. A year away from the general election, Modi knows that confronting it head-on rather than sidestepping it may be a smarter strategy.

Modi’s statement on pakora sellers wasn’t a random remark. It was seconded by BJP president Amit Shah in Parliament. The backdrop is a growing realisation that the government or, for that matter, any future government, will not be able to create formal jobs for over 6-7 million joining the country’s workforce annually. In 2016-17, actual jobs created were 4.1 lakh as against the BJP’s electoral promise of creating one crore jobs annually.

There is an attempt in the NDA government to look at the problem from a different angle. From demonetisation to GST, formalisation of the economy has been a constant theme for the Modi government. With 80% of the workforce engaged in the cash-heavy informal sector, the attempt has been to integrate them into the country’s economy. And, while in transition, why shouldn’t this huge chunk of the workforce get counted on the economic map? Why shouldn’t a domestic help earning Rs 15,000 a month or a cab driver with a monthly incomeas high as Rs 50,000 figure in the government’s job statistics?

A hotel management graduate from Bhubaneshwar, Dimple Narula, 38, worked in hotels before turning entrepreneur in 2007, supplying corporate lunches. Now, she caters to parties, weddings etc and has 10 staff members.This begs the question: what constitutes a formal sector? The Economic Survey 2018 defines formal employment as, one, where the employers are providing some kind of social security (like EPF and health or life insurance) to their employees, and, two, where firms are part of the tax net.

Pakora sellers find no place here. Not yet. According to the first definition based on social security, 31% of India’s non-agricultural workforce, 75 million out of an estimated at 240 million, have formal employment. According to the employers-in-the-tax-net definition, 54% (or 127 million) of the non-agricultural workforce is in the formal sector.

Counting self-employed among those having jobs may become contentious, but this line of thinking is likely to dominate the political discourse before the next Lok Sabha elections. Some government officials in the know say that the Union labour ministry is contemplating a formula under which 40-50% of the 104 million beneficiaries of the Pradhan Mantri Mudra Yojana) could be statistically bracketed as employed if an ongoing survey demonstrates that people have become self-employed after availing of the loan. Mudra loans (up to Rs 10 lakh) are disbursed for non-agricultural activities, including dairy, poultry and beekeeping.

A truck driver earlier travelling long distance, Surjit Singh, 32, became an Ola driver in 2014 to be closer home. Last year, he bought a Maruti Dzire on loan which has pushed up his earnings

Technology, the Job SlayerCreating jobs is India’s biggest worry and it will only get worse. The NDA government is coming to terms with it.

According to a Bloomberg News analysis, India is expected to have a billion people aged between 15 and 64 years of age by 2027, which means the world’s largest — and youngest — workforce. As the economy progresses, millions of people employed in lowproductivity farm sector will have to be moved to higher-productivity non-farm jobs. Barring China, this scale of migration has no precedent in history. Unfortunately, the opportunity that China had – to turn into the world’s factory that could absorb millions of the country’s agri-workers — may not be available for India. This is the age of Brexit and deglobalisation championed by US President Donald Trump and export barriers are set to rise.

An engineer, Pratyush Baranwal, 33, worked in the corporate sector before returning to Indore to set up a dairy farm. He started with five Gir cows, has 14 now and plans to quadruple in four years. He makes a quarter of what his corporate salary.Meanwhile, technologies like robots and 3D printing has jump-started a re-shoring of manufacturing facilities back to the developed world. India’s IT industry is in a crisis, with technological changes forcing them to pivot or perish. While experts disagree on the degree of disruption technology will cause, the automation wave is certain to cull jobs across geographies and sectors. Amid all this, the sharing and gig economy is growing by leaps and bounds, forcing a debate on the fundamental question of who is an employee. In the US self-employed workers today stand at 34% and are forecast to touch 43% by 2020. This trend is already playing out in India, with cab-hailing apps like Ola and Uber employing 5,50,000 and 3,50,000 drivers respectively in India as of July 2016, according to Statista.

These convulsions of change notwithstanding, India historically has had a problem creating jobs. Its employment elasticity – a measure of the percentage change in employment with a 1 percentage point change in economic growth — has been among the lowest. It is now declining – from 0.3% between 1991 to 2007, it has halved today. Partly, this is because India’s growth, dominated by the services sector and not labour-intensive manufacturing, has had a bias for skilled workers.

With little options, a majority of India’s workforce is engaged in informal, unorganised, low-income, low-productivity jobs. Says Manish Sabharwal, cofounder, Teamlease: “This is not self-employment. This is self-exploitation. They need to be moved up from subsistence-based livelihood.” He makes the distinction between good self-employment and bad self-employment: “Policy makers in India should focus on increasing formal wage employment and good self-employment.” (See column “End Self-Exploitation”)

Entrepreneur vs Self-employedOften, “self-employed worker” and “entrepreneur” are interchangeably used. But there is a difference. “Self-employment in advanced countries is different from that in developing countries,” says Delhi-based Majid Nomaan, senior employment specialist, ILO.

In developed countries where social security is available, self-employment is more about entrepreneurship. “In societies with high poverty, self-employment is more about seeking livelihood for survival,” he adds. According to PRICE (People Research On India’s Consumer Economy), of the 281 million households in India, 108 million are selfemployed of which 55 million (20%) are engaged in farm-related activities, 10 million (4%) are petty traders like street-side vendors, 26 million (9%) are shop owners or traders, and 14 million (5%) are non-professionals like cab drivers and carpenters. Just 3 million or 1% are well-paid professionals like doctors, architects and accountants. “Self-employed isn’t a homogeneous group. Income instability is their biggest problem. One serious illness can set them back by years,” says RK Shukla, director, PRICE.

12th pass, mother of a 7-year-old, Neetu Narula Chakravarti, 36, was never keen on studies and wanted to do her own thing. For two decades now, she offers beautician’s services at homes in Delhi.Gurbachan Singh, visiting faculty at the Indian Statistical Institute, gives another reason why some people opt for self-employment. “It is linked to the country’s financial infrastructure. A more developed financial sector leads to less self-employment,” he says. Poor avenues for financial investment or little knowledge of how to go about it makes many opt for self-employment. The scope of tax evasion makes it even more attractive.

Mainstreaming the MarginIndia’s self-employed will remain humungous.

A KPMG report expects micro, small and medium enterprises (MSMEs) to play a critical role in creating jobs. It forecasts them chipping in 15% to the GDP by 2020, up from 8% today, BUT creating half of the total new jobs. This will more than double the current MSME workforce of 106 million. This won’t be an aberration.

Globally, developed economies lean heavily on a strong MSME to chase growth and create jobs. In countries like Germany, US, UK and Singapore, MSME contributes over 40% to the GDP. It is also an employment engine — creating 67% of total jobs in Brazil, 62% in Germany, 53% in the US and 52% in the UK. The Modi government is tackling the job issue with a four-pronged strategy. Investments, policy initiatives and sector focus will be evaluated on the basis of their job-creating capabilities.

A Mumbai-based post-graduate in physics, Trupti Sarangi, 44, quit working when her daughter came along. She works to satiate her creativity in baking, and earns Rs 30,000 a month.A new industrial policy is likely to be unveiled in April-May (See “ A New Industrial Policy is On the Job ”). If government officials in the know are to be believed, the focus of the policy will be on finding ways to gainfully employ the youth who enter the workforce every year, apart from checking job losses triggered by Industry 4.0, the global phenomenon of automation in manufacturing. Formalisation of the informal sector is another area where the government is focusing.

The intention is to widen tax base. Under the new GST regime, the number of indirect tax payers rose by 50% or by 3.4 million. The government is pushing for digital transactions including the UPI even as it is incentivising employers to hire staff on rolls. Under the Pradhan Mantri Rojgar Protsahan Yojana, employers are incentivised to register in the EPFO: the government will pay 8.33% (it is 12% in labour-intensive textiles sector) of PF contribution for all new employees enrolled in EPFO in the first three years.

A pharma executive in Bengaluru, Abhishek Saha, 33 decided to set up a tea stall in his hometown Agartala two years back. He gets over 400 customers a day and he earns Rs 1.8 lakh a month.Post demonetisation, the Ministry of Labour held 1.5 lakh camps over six months, opening 49.6 lakh bank accounts for workers, nudging employers to transfer wages electronically. On a base of 80 million employees’ provident fund subscribers, a recent report expects the count to rise by 7 million in 2017-18. “If we want growth with jobs, the push has to be on small industries, and not on the middle or the top,” cautions Arun Maira, former member of the now disbanded Planning Commission, who last week attended a roundtable on the draft industrial policy.

Adds Prantik Ray, professor (finance), XLRI: “The difficulty to access financial products is one of the key reasons why the self-employed are not able to move ahead.” This is where Mudra scheme fits in. “The biggest beneficiary of initiatives like ease of doing business will be the MSMEs. They bear the biggest brunt of the inefficiencies in the system,” says Nitin Atroley, office managing partner (north), KPMG India.

The government is said to be looking at measures to tackle the NPA and insolvency issue in the MSME sector as well. A host of schemes has been rolled out to improve the quality of life of the self-employed: the National Health Protection Scheme, which will cover 10 crore poor households, the low-cost Pradhan Mantri Jivan Jyoti Bima Yojana (life insurance) and the Pradhan Mantri Suraksha Bima Yojana (accident insurance), and the Jan Dhan Yojana aimed at financial inclusion. Will this help? India’s job problem is huge and complex with no easy answers.

The NDA government, in its last year, is short on time. And India’s jobseekers short on patience. In politics, perception management is as important as the change on the ground. Expect the Modi government to lean on both as it braces for the next general elections.